Roundtable: Data centres (part 2)

By GovTechReview Staff
Wednesday, 04 September, 2013

Data centre evolution has taken major steps forward as an ever more-intense focus on energy and operating efficiency drives physical and virtual consolidation. These two super-trends have in turn spawned a wave of innovation by vendors offering new perspectives on everything from the physical plant of the data centre, up to the management techniques used to handle previously unthinkable volumes of virtual machines.

GTR recently assembled technical experts across all the levels of the data centre infrastructure to find out what they see as the most significant opportunities – and the biggest threats – moving forward. Participants include Ross Dewar, managing director of Emantra, a Microsoft-centric provider of enterprise-class software infrastructure; Malcolm Roe, general manager of data centre operator Metronode; David Blumanis, data centre advisor for Asia-Pacific & Japan with data-centre infrastructure provider Schneider Electric; and Bevan Slattery, executive deputy chairman of IPO darling and data-centre market newcomer NextDC.

GTR: What should customers look for to ensure their provider has the nous to meet their requirements?

ROE: In the past, tenants have accepted operator claims around reliability and design availability. But we’re one of the first in Australia to accredit our designs to Uptime Institute standards, and I think what we’ll see very quickly is that the Uptime Institute will start enforcing tier claims made by operators that can’t be substantiated.DataCentres-Roundtable

They have gotten away with it in the past, but some of these facilities have since proven themselves to be not exactly what they were held out to be. If the industry steps up to the plate and certifies their facilities, the tenant community will have comfort that they’re dealing with apples and apples.

GTR: The PUE measurement has become the gold standard for measuring data-centre efficiency. How valuable a tool is it for government bodies aiming to improve their facilities’ efficiency – and how much of a competitive differentiator does it provide commercial operators?

ROE: Energy efficiency is really our focus going forward. We’ve got a range of first-generation data centres that are relatively inefficient compared to our new-generation facilities. We’ve spent quite some time developing a more environmentally friendly data centre design going forward. A lot of this focus is on free air cooling; we’re employing direct air-side economisers on our new-generation data centres, and have modularised key plant so that we’re only equipping mechanical and electrical equipment to suit the demand from the facility.

We were the first to adopt direct rear cooling in any large-scale facility – and we’re seeing some early response. Overall, we’re targeting average annual PUEs below 1.2 for our south and eastern Australian facilities. The industry average is closer to 2.0 right now, but we’re getting some of our earlier-generation facilities down to a lower level than that. So the new facilities really represent and 80 percent energy savings for the cooling loads, compared with our current facilities.

BLUMANIS: I think the PUE measurement is open for abuse the way a lot of organisations are using it. The first thing I’d be talking about is to ask where you’re measuring the PUE from. And the second thing is that when people build their data centres, they’re normally building for 15 to 20 years. So, the structure and the shell of the building is there. But no matter how much you try to modularise and rightsize it, the PUE is always varying, versus how much PUE the building is designed for when it’s at load.

Things like diesel generators and big switchboards you’re fitting out on day 1 for the entire life of the building – but things like UPSes and chillers you could be deploying in a modular, scalable fashion. So, the PUE varies throughout the whole lifecycle of the data centre depending on its usage and how it’s been designed. Then these things called human beings come in and start messing around.

GTR: What can be done to more proactively manage PUE to deliver efficiency outcomes?

SLATTERY: Power efficiency is very important, but sometimes organisations must make decisions not just on efficiency but also on cost. The flipside of that is that the less efficient you are, the more it’s going to cost to provide services for those people. Power costs are the biggest cost of the data centre; the more effective you can be in your power efficiency, the more cost-effective it’s going to be for your clients. That’s why we announced we were putting over 400kW of solar panels on our Melbourne facility, and over the next few months will be putting over 1MW of panels in Melbourne, Sydney, and Perth.

We’re going to take a lot of learnings out of this and redesign our data-centre footprints to maximise the potential for solar. But we’re also seeing from a number of corporate clients that they would like to have a rack 50 or 100 percent offset by solar power – and they’re happy to pay more money for that because they are so focused on the carbon footprint. We’re giving our clients that option, and they can walk on the roof to say “these are my solar panels”.

BLUMANIS: A lot of people get hung up on the PUE metric and not on all the things that need to be done. Data centre infrastructure management (DCIM) is a new area of management that literally builds the glue between IT enterprise roots and facilities’ building management systems to drive the operations of the data centre, do real-time monitoring of the PUE of a facility, and look for opportunities to reduce consumption. There are new tools, new ways of operating, and new policies that need to be deployed to manage the PUE.

The interesting thing is that a lot of customers have a lot of engineering people trying to move their mindset away from these traditional legacy environments where IT is fully understanding of the concept. The engineers say ‘IT never uses the capacity they’re asking for’ – and that’s why education is absolutely critical to building the data centre of the future.

It’s really about bringing ITIL to the capacity infrastructure: if there is a cooling unit in trouble, for example, we can now tell a virtualised environment to fail to servers on the other side of the room – which the IT currently doesn’t do. We’ve built the glue between the two to keep up if you’re all of a sudden requiring an awful lot of cooling in one particular part of the room.

GTR: The data-centres industry has been mentioned repeatedly as a victim of the carbon tax. How much will its introduction affect your bottom line, and your operations in general?

SLATTERY: The carbon tax will add to our costs and we’ll be passing this cost on to our clients. It adds around 35 to 50 percent to our direct energy bill, so that’s very significant. Being a new provider and a very energy efficient provider gives us an advantage compared with other providers that are older, and operate on some of the older kind of technologies. It gives us an advantage for the people operating in Australia.

There is no one else within Asia that has a similar regime: you’ve got countries like Singapore, Japan, Hong Kong and others that don’t have a carbon tax. If Australia wants to be a global leader in the digital economy, I would really encourage the government to consider excluding data centres from the carbon tax – and, particularly, energy efficient data centres.

Australia needs to present itself in the most attractive way possible to global providers to host their content here. And while Australia is typically seen as having low sovereign risk, the carbon tax does come up when I’m talking with people overseas. I won’t get into the merits of the carbon tax, but if you want to take Australia on the global stage and attract international investment, the government should sit down and think about a number of matters.

ROE: The carbon price will have a relatively small impact on energy costs; the numbers suggest that it is only 6 percent of the total price increase over the next three years. So it’s a smaller impact; the larger input cost increase has come from distribution charges from energy retailers and distribution networks bolstering their infrastructure. Wholesale generation prices have stayed relatively flat; there has been some increase there but nowhere near the increases in the distribution network. AEEMA are predicting 37 percent increases across Australia in the next three years.

The carbon tax is not a huge issue by itself; it’s one of the drivers for the forecast increase over the next three years – but it’s a smaller part of the increase. As a wholesale provider, we pass through our energy costs and we’re quite transparent when it comes to utilisation. So, customers can see the impact of rate increases directly. Today, energy is probably 40 percent of their data-centre costs, but as the price of energy goes up, it will become a larger part of their data centre costs.

BLUMANIS: We’re seeing some enterprise customers in Australia thinking that if they go to a colocation company or outsource their services totally to a managed service provider, they are divulging their responsibilities on the carbon tax by giving it to someone else. And it’s yet to be judged on how they do that, and how it’s going to be managed.

But we’re also seeing some Australian companies with international operations looking at relocating their data centres out of Australia, and talking to us about which are the best places in Asia to locate their environment – all because of the carbon tax and to help reduce their carbon footprint in Australia.

And we’re seeing other Asian governments with massive campaigns to try and entice these businesses – these colocation and large cloud-computing providers – to bring their services to these countries. They’re providing a lot of tax incentives and plans – and we’re not seeing the same approach from the Australian government. These drivers are going to create a lot of upheaval in the data-centres market.

DEWAR: Our business is a scale business; the more scale we’ve got, the more scale we can put onto the bottom line. And it may be that we can absorb much of the effect of the carbon tax because our business is getting more profitable as we grow to scale. Data-centre costing is one of the largest impacts on my business, but none of the operators I’ve approached to date have been able to be precise about what’s going to happen. I would imagine that sooner or later we’ll get hit with a price increase of 10 percent – but we’ve got long-term contracts in place that I hope might give us some protection in the short term.

In the modern way of delivering these services, one of the things the customer wants from us is certainty about price; often it’s a CFO or CEO who is more concerned about risk and forward visibility of costing. They are the people that make the decision to outsource to companies like ours, and one of the things this industry should be able to do is deliver that certainty. As a service provider in this modern way of delivering as a service, it’s my job to manage all that. Emantra has held our prices steady for five or more years now, so they are forwardly visible. And I would hope that the carbon tax maybe wouldn’t even show through to the customer at the end of the day. If I can get some honest interest in and takeup of our services in Canberra, I’ll be able to eat that.

ROE: Ultimately, if we can run a facility with less people and deliver the same service levels, those savings are passed on to our tenants.

GTR: Outsourcing has a storied history in the government market, what with the enthusiasm and subsequent reality check in areas like outsourcing and shared services. Could the data- centre reinvention effort also turn into a fizzler?

BLUMANIS: We’re seeing several trends. One is governments trying to build their own efficient data centres, but I’m not seeing the governments themselves taking a leadership role in their own facilities, in building them. The second trend is that I’m seeing government now trying to facilitate to build a colocation/ hosting type data centre for government to bring all the different agencies and departments into that colocation facility.

However, I’m not seeing that many governments being that successful in building that appropriate business model; the government has never gone into this kind of business before – and some departments are reluctant to do this. Where there’s a financial gain and business relationship partnership between the two organisations, they’re going into business together to bring services where they still have arm’s length control over the facility and how it’s run. Once you see confidence, you’re seeing a big shift around the cloud stuff.

DEWAR: The government will inevitably take up this model; there are going to be some early providers, and we’re one of those. There will be others who only hop on when the going is good, and that’s fine – but unless we can all get some sort of return out of it within a few years, it will all go away and the government will be back to square one. They’ve got to understand that it’s a scale business, and if their expectation is only that these services will be delivered at a low cost – which they can be – then that low cost really only becomes viable for suppliers with a reasonable amount of scale. You can buy stuff from Singapore that’s hosted by Microsoft for $10 that I’d probably want to charge $30 for, but I can justify that in terms of the value I add. But if there’s a $10 headline price and everyone expects the price of those services to be quite low and coming down, we’re not going to get to those prices until the scale increases.

GTR: Most of the government data-centre strategising that we’ve heard about is coming out of Canberra and aimed FMA agencies. What can agencies at other tiers of government learn from AGIMO’s efforts?

DEWAR: AGIMO, under John Sheridan, has done a lot of good work in helping to define the market. I wish that was the case for local governments around Australia, but there’s nothing like the level of mature thought around these sorts of services in local government as in the federal government. They need to pull some of these other agencies along.

SLATTERY: There have been reports on the AGIMO data centre panel that indicated it’s struggling to get traction. I think it was a great concept, founded in the Gershon Review about aggregation and getting pricing, and so on.

When it was founded, it was a good concept – but one thing that has surprised a lot of people is the rapid interest in material and meaningful takeup of cloud-based services. Government would go out and take 200 or 500 square metres of data centre space, and that was a 10-year investment. But now we’re seeing MSPs asking government “why are you taking data centre space when we can provide you with IaaS and you can increase and decrease that as you need to?”

At the end of the day you’re not after data-centre space; you’re after an application or a shared infrastructure. And if you’re looking at being efficient, there is probably nothing more efficient than to have a couple of infrastructures for one agency where they’re able to buy disk, processing power, or memory on demand. And the discussion with government is really about IaaS, and very much about applications or software as a service. That’s really where people seem to be heading.

BLUMANIS: At every level, governments have to take a leading position – not just by writing white papers, but by doing their own facilities. It’s not ‘do as I say’ but ‘do as I do’. – David Braue

This is the second part of a roundtable that ran in the June/July 2012 issue of Government Technology Review.

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